The chancellor claims he'll balance the books and avoid tax rises. But his record so far is of failure
The party conference season doesn't always change the political weather. This year it has. Ed Miliband's decision to stand up to the power companies in the face of market failure struck a loud chord with the public. And no, it's not anti-business to challenge such failures.
His jibe that the rising economic tide would lift only yachts, struck a raw nerve with the Tories. So they rushed out measures to help homebuyers, despite real fears of a housing bubble. They announced a married couples' allowance worth less than £4 a week. They promised to freeze fuel duty. The funding of these promises, costing more than £2bn, is to be met from some unidentified source. Strange that when Labour makes promises, the Tories claim it will mean more borrowing, yet it's fine for them to make unfunded promises.
The Tories have also changed their tune on the economy. In September George Osborne claimed to have slain the dragon of downturn. Many economists have their doubts. It was also bad politics. A dead dragon poses no political threat. So this week the beast has been resurrected: it's not over, after all.
The chancellor promises another six or seven years of austerity. After that, he claims he will balance the books. This raises questions about both the credibility and the desirability of his promise. On credibility, consider the facts: in 2010 the economy was growing and we still had our triple-A rating – yet at the time Osborne claimed we were like Greece. More than that, he said he would balance the books by 2015.
Today, having moved considerably from his original plans, he is borrowing 68% more than he promised. He will borrow £96bn in election year alone. The deficit, far from being eradicated, is still at £120bn. Osborne's debt reduction target has been kicked into the far distance, and the effect of many of the cuts pencilled in for the next few years has yet to be felt.
So the chancellor's record is not good.
Is it really credible to deliver the scale of the cuts needed to balance the books and avoid tax rises, as Osborne now says it is? Not without economic growth it isn't – something that the prime minister seemed to concede in his speech yesterday. Is it credible to deliver a 20% real cut in the police budget, both in this parliament and the next?
There are two issues here. First, what sort of services will the public get if they are hacked back on this scale? The Tories need to tell us. Second, the Conservatives' rhetoric often implies that the public sector is bad and the private sector the only good. Yet, for example, this country's future depends on the quality of our education, not just for the few but for the many. And what price do we put on good quality health care, let alone the increasing costs of caring for a growing elderly population?
This is a debate we must have. It is essential to bring down our borrowing and debt. It's worth remembering that in 1997 Britain's debt was the second highest in the G7. A decade on, it was the second lowest. But these reductions must be delivered both credibly and in a way that does not damage the UK's economic and social fabric. The best way of doing that is to get sustainable growth. To promise a balanced budget, come what may, carries the risk of damaging cuts and unacceptable tax rises.
Although economic growth seems to be returning, it is still lagging way below what was expected by now. What we produce as a country, our GDP, is not likely to return to its pre-crisis levels until 2018. This government is not on strong ground, either in blaming the crisis on the spending it supported in opposition, or on the credibility of its performance since the election.
The Labour party will stay in the middle ground, promoting enterprise and growth and never afraid to challenge market failures. Nor should we be scared to make the case that the public and a thriving private sector need each other. We need them both.
George OsborneEconomic policyConservativesLabourEconomic growth (GDP)EconomicsAlistair Darlingtheguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds |
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